Scale Your Business and Exit with Craig West
Selling a business is the ultimate entrepreneurial dream. But even if you don’t intend on selling out just yet, it may be time to start planning it. Our guest today is an expert on business succession and exit planning.
Craig West is a strategic business and financial mentor for mid-market business owners. He’s also the Founder and Chairman of Succession Plus, which is the largest Business Succession and Exit planning consulting firm in Australia. With over 20 years of experience advising business owners and a background as a CPA in public practice, Craig knows the ins and outs of strategic development, exit planning, and business succession.
He believes there are 21 key steps involved in effective succession planning which identify and cover the most important points in this complex process but there is no “one size fits all” solution. That’s why Craig uses his innovative approach to help other business owners maximize business value and achieve a successful exit.
In this episode of the Think Business With Tyler podcast, we talk about business succession, exit planning, and strategic value drivers. We also get into the key things to take into consideration when preparing for a business exit, the importance of building a business that can run without you, and finally, why you need to begin with the end outcome in mind.
If you’re a business owner looking to learn more about succession and exit planning, tune into this episode to hear what Craig says.
💡 Name: Craig West
💡 What he does: Craig is the Founder and Chairman of Succession Plus, which is the largest Business Succession and Exit planning consulting firm in Australia.
💡 Noteworthy: Craig has over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.
💡 Key Quote: “Most business owners look at their business from the point of view of an owner and they love it because it’s their baby. But when you look at it from a buyer’s point of view, it’s not great. And therefore you start to identify what are these gaps? What are the things we should work on that actually really drive value?”
💡 Where to find Craig: LinkedIn
What is succession & exit planning? Most business owners intend to exit their business one day. But not enough of them start thinking about their exit strategy in time. Succession and exit planning are one of the first steps in preparing for your exit. If you want your organization to be in the right hands, you have to find the right set of hands and train them for what’s coming.
Craig explains, “Succession and exit planning for me is about getting three things right at the same time. So the business needs to be ready to transition both ownership and control. So that might mean passing it on to your children if it’s a family business, it might mean selling it to your competitor down the road. It might mean an employee share plan where you exit to sell to your employees. It might mean bringing in a private equity firm or for larger businesses it might even mean listing on a stock exchange. All those things are exits and there’s a lot of preparation that needs to be done for any one of those exit options to work properly.”
If you want to exit your business, you’ve got to get it to run independently to you. One of the most common mistakes business owners make is that they build their business around one person – themselves. However, if you want to exit successfully one day, you need to build a business that can run without you. Train and empower your staff to manage your business so that you can leave with peace of mind one day.
Craig says, “Most Anglo-Saxon male baby boomers are control freaks and therefore the business is built entirely around them. It doesn’t operate when they’re not there. Staff don’t have the empowerment to go and do what they need to do. And so the business is key person dependent and unfortunately, you can’t sell that business. You can’t transfer it. It’s a job. Unless you’re playing soccer for Manchester United, you can’t sell a job. You’re locked in. So you’ve really got to get the business to be working independently of you.”
Find the strategic value drivers in your business. If you want to sell your business one day and exit rich, you need to start planning your exit strategy as soon as possible. One of the critical things to think about is finding the strategic value drivers in your business.
According to Craig, the key to a successful exit is to make your business more valuable. He explains, “Everyone wants to pay less tax but what they should be asking is, ‘How do I make that a $10 million business? How do I grow the value? How do I make more money? How do I improve? How do I expand it?’ And so that finding the strategic value drivers in a business is actually the critical thing to work out. What do I really have here that adds significant value that means when I exit, I’m going to get a big payout?”
Begin with the end outcome in mind. It’s never too early to start planning your business exit. Even if you don’t intend of selling out yet, you should start preparing for it from day one. From your processes to your staff, everything should be mapped towards your end outcome.
Craig explains, “Begin with the end in mind and every decision you make in running your business should be mapped towards your exit plan. So is that decision I’m making to employ that person or buy that piece of equipment or expand into that different area getting me closer to my exit goal or further away from it? If it’s getting you further away from it, wrong decision. Don’t do it.”
“Part of our process is actually looking at things like management succession because if you want to exit somebody has to run that business, whether it’s one of your existing employees, whether it’s a family member, or whether it’s a buyer that comes in externally, but they have to be capable of running it and they have to have the resources around them to run it.”
“Most people are so busy in the business day to day running it, keeping it going, selling, invoicing, collecting money, paying staff, doing all the day to day stuff, you don’t have time to stop and plan around the exit, what’s your exit strategy in 10 years time? So that’s the first part, start as early as you can, begin with the end in mind, get a strategy around what the exit looks like.”
“No one likes to hear the fact that their baby’s ugly, but that’s what you’re saying to the business owner, ‘Look, you might think you’ve got this fantastic business’ and I’ve had people tell me, ‘My business is worth between eight and $10 million’. And when I value it, I say, ‘Well, actually it’s worth two or three and it can’t be sold at the moment because it’s all dependent on you.’”
“The first thing is most business owners are by nature entrepreneurial risk-takers. They love sales. They love growing, they’ve got all these ideas, they grab the shiny ball and run with it and get distracted from the main game. And so that’s the first thing is, what do you actually do? Is that a niche? And you just get focused on being really really good at that. That’s the lesson from my own succession plan.”
“The speech engine that drives Siri was an acquisition years ago. Now the company that had it had this really valuable piece of technology, but they couldn’t leverage it. Suddenly, Apple buys it, it’s in every single device you buy, you can’t uninstall it. It’s like it’s part of the gig. So just looking at your business and saying what am I intangible assets? Is there some process or recipe or formula or something you do that is different to everyone else that makes your business far more valuable? Those businesses sell for far more.”
Email Craig at firstname.lastname@example.org